- Loss making Dutch and Irish businesses told to director for £1.71
- Investors are awaiting updates on April cyber attack and March CMA probe
CVS Group is in the process of selling its Dutch and Irish businesses for a nominal value of just €2 (£1.71) as it refocuses efforts on its profitable UK and Australia operations.
The veterinary services provider, which runs 500 practices across its four territories, told investors on Tuesday that it would divest from the Dutch and Irish businesses due to their ‘sub-scale nature’ and ‘particular challenges’ within each market.
The Dutch and Irish units made combined pre-tax loss of £6.8million last year and CVS said they were on track to post another loss of £6million for 2024.
CVS bets on more profitable UK and Australian businesses as it offloads Irish and Dutch units
CVS added the ‘significant management focus’ needed to turn around the ailing Dutch and Irish units would be better spent on the group’s growth strategy.
Boss Richard Fairman said: ‘Our Netherlands and Ireland practices no longer fit with our strategy of focusing on growth in the UK and Australian markets.
‘We have exciting plans to expand in Australia and this disposal will free up working capital and management capacity to support our continued expansion.’
The non-core businesses will be sold to Global Veterinary Excellence, whose owner James Cahill is a vet and former director of the units.
CVS is also providing a £600,000 unsecured loan ‘at a market rate’ to Global Veterinary Excellence, the group said.
Fairman added: ‘We are delighted to have found a solution that enables our former colleagues to continue to deliver high quality veterinary care in the Netherlands and Republic of Ireland and wish James and Global Veterinary Excellence Limited well as an independent business.’
CVS experienced ‘considerable operational disruption’ in April after it was struck by a cyber incident, forcing it to accelerate the roll-out of the transfer of its IT infrastructure and practice management system to the cloud.
Analysts at Peel Hunt said CVS is ‘yet to quantify the impact’ of the cyber attacks, but the broker expects it to be ‘greater than the benefit’ provided by disposing of its Irish and Dutch businesses and a ‘short-term’ impact on like-for-like sales.
Peel Hunt reiterated its ‘Add’ rating on Tuesday with a target share price of 1,500p
CVS will also be focused on the outcome of the Competition and Markets Authority’s probe into the veterinary sector launched in March, with an update expected soon.
CMA concerns that British pet owners might be overpaying for medicines and prescriptions saw shares across the sector plummet, and CVS shares are yet to regain ground after the sell-off.
CVS shares were down 1.3 per cent to 1,046p in early trading on Tuesday.